If there are irregularities in the functioning of the bank, citizens certainly have a right to know about the same and the larger public interest would be served by disclosing this information, the CIC ruled. This is the 176th in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC), while allowing an appeal, directed the Public Information Officer (PIO) of Reserve Bank of India (RBI) to provide complete information regarding working of Deendayal Nagri Sahakari Bank Ltd as well as inspection reports, file notings of RBI to the appellant the Right to Information (RTI) Act.

While giving the judgement on 30 December 2011, Shailesh Gandhi, the then Central Information Commissioner said, "If there are irregularities in the functioning of the Bank, citizens certainly have a right to know about the same. A larger public interest would be served by disclosing this information- under Section 8(2) of the RTI Act. The Nation's interest would be better served through transparency and exposure of illegal acts.."

Mumbai resident Dr Mohan K Patil, on 8 March 2011, sought from the PIO information illegal working of Deendayal Nagri Sahakari Bank Ltd at Ambajogai, District Beed (Maharashtra) and action initiated and taken by the RBI. Here is the information he sought and the reply provided by the PIO under the RTI Act...

1. Copies of complaints received by RBI against illegal working of the said bank, including violations of the Standing Orders of RBI as well as the provisions under Section 295 of the Companies Act, 1956.       

PIO's Reply- Disclosure of information regarding complaints received from third parties would harm the competitive position of a third party. Further, such information is maintained in a fiduciary capacity and is exempted from disclosure under Sections 8 (1)(d) and (e) of the RTI Act.

2. Action initiated by RBI against the said bank, including all correspondence between RBI and the said bank officials.    

PIO's Reply- (a) A penalty of Rs1 lakh was imposed on Deendayal Nagri Sahakari Bank Ltd for violation of directives on loans to directors/their relatives/concerns in which they are interested. The bank paid the penalty on 8 October 2010.

(b) As regards correspondence between RBI and the co-operative bank, it is advised that such information is maintained by RBI in fiduciary capacity and hence cannot be given to outsiders. Moreover disclosure of such information may harm the interest of the bank and banking system. Such information is exempt from disclosure under Sections 8 (1)(a) and (e) of the RTI Act.

3. Finding of the enquiry made by RBI, actions proposed and taken against the bank and its officials- official notings, decisions and final orders passed and issued.  

PIO's Reply- Such information is maintained by the bank in a fiduciary capacity and is obtained by RBI during the course of inspection of the bank and hence cannot be given to outsiders. The disclosure of such information would harm the competitive position of a third party. Such information is, therefore, exempt from disclosure under Sections 8 (1)(d) and (e) of the RTI Act.

As regards action taken against the bank, see reply at S. No. 2 (a) above.

4. Confidential letters received by RBI from the Executive Director of Vaishnavi Hatcheries Pvt Ltd complaining about the illegal working and pressure policies of the bank and its chairman for misusing the authority of digital signature for sanction of the backdated resignations of the chairman of the bank and few other directors of the companies - details of action taken by RBI on that.

PIO's Reply- See reply at S. No. 2 (a) above.

Not satisfied with the PIO's reply, Patil filed his first appeal. In his order, the First Appellate Authority (FAA) observed that the CPIO had furnished the information available on queries 2 and 4. "Further, information sought in queries 1 and 3 was exempt under Sections 8(1)(a), (d) and (e) of the RTI Act," the FAA said.

Patil, the appellant, not satisfied with the FAA's order, then approached the CIC with his second appeal.

During a hearing on 9 November 2011, the PIO stated that he would like to submit written explanations to the CIC in support of his arguments. The Bench directed the PIO to send his written submission to the CIC via email before 20 November 2011.

During the hearing on 29 November 2011, Mr Gandhi, the then CIC, said that the Bench had received written submissions from both parties on 18 November 2011, which were taken on record by the CIC. "On perusal of papers, it appears that information on query 4 has been provided to the appellant," he said.

The PIO of RBI submitted that under Section 35 of the Banking Regulation Act, 1949 (the BR Act), inspection and scrutiny report is treated as confidential. It contains information in fiduciary capacity and only disclosed to the banks for specific purpose of rectifying deficiencies and irregularities pointed out in the inspection report. In case of cooperative banks, the inspection report is also forwarded to the Registrar of Cooperative Societies of the state concerned. Scrutiny/inspection report contains information regarding functioning of the bank intended to maintain privacy and fiduciary relationship between RBI and the bank. Disclosure of such information may cause more harm to the public interest and competitive position of the bank. Inspection documents are privileged documents under Section 34A of the BR Act. The BR Act is a special law and would prevail over the RTI Act, the PIO said.

Mr Gandhi said, "Section 22 of the RTI Act expressly provides that the provisions of the RTI Act shall have effect notwithstanding anything inconsistent therewith contained in the Official Secrets Act, 1923, and any other law for the time being in force or in any instrument having effect by virtue of any law other than the RTI Act. Section 22 of the RTI Act, in no uncertain terms, lays down that the RTI Act shall override anything inconsistent contained in any other law."

The High Court of Delhi in Union of India vs. Central Information Commission & Anr. 2009 (165) DLT 559 has held that-

"Section 22 of the RTI Act gives supremacy to the said Act and stipulates that the provisions of the RTI Act will override, notwithstanding anything to the contrary contained in the Official Secrets Act or any other enactment for the time being in force. This non-obstante clause has to be given full effect to, in compliance with the legislative intent. Wherever there is a conflict between the provisions of the RTI Act and another enactment already in force on the date when the RTI Act was enacted, the provisions of the RTI Act will prevail…"

Mr Gandhi said, "On a bare perusal of the provisions of the BR Act cited by the PIO, they appear to impose restrictions on access to information held by or under the control of RBI. This is prima facie inconsistent with the RTI Act, which mandates disclosure of information unless exempted under Sections 8 and 9 of the RTI Act. Therefore, in accordance with Section 22 of the RTI Act, the provisions of the RTI Act shall override the provisions of the BR Act as regards furnishing information. Consequently, whether or not information should be furnished has to be examined in light of Sections 8 and 9 of the RTI Act only."

While denying the information, the PIO had claimed exemption under Section 8 (1)(d) and (e) of the RTI Act.

Section 8(1)(d) of the RTI Act exempts from disclosure- "information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;".

Mr Gandhi said, in order to claim the exemption under Section 8(1)(d) of the RTI Act, the PIO must establish that disclosure of the information sought (which may include commercial or trade secrets, intellectual property or similar information) would result in harming the competitive position of a third party.

The PIO had argued that disclosure of information regarding complaints received from third parties would harm the competitive position of the third party. "This Bench is unable to appreciate how disclosure of complaints made against the Bank would harm the competitive position of the person/ entity making these complaints. Moreover, the PIO has not even clarified the nature/ identity of the third party," Mr Gandhi said.

Section 19 (5) of the RTI Act states that 'In any appeal proceedings, the onus to prove that denial of a request was justified shall be on the Central Public Information Officer or State Public Information Officer, as the case may be, who denied the request.'

Mr Gandhi said, "The PIO has not justified this denial claiming exemption under Section 8 (1) (d). Therefore, the denial of information on query 1 on the basis of Section 8(1)(d) of the RTI Act is rejected."

Section 8(1)(e) of the RTI Act exempts from disclosure "information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;".

Mr Gandhi said, "All relationships usually have an element of trust, but all of them cannot be classified as fiduciary. Information provided in discharge of a statutory requirement, or to obtain a job, or to get a license, cannot be considered to have been given in a fiduciary relationship."

The PIO argued that the information is maintained in a fiduciary capacity. The complaints received from the complainants disclosed their personal confidential information and disclosure to the Appellant would not serve any public purpose except making the personal information public.

"In the present matter, it is clear that while third parties may have given information to RBI in confidence or in trust, there does not appear to be any duty cast upon RBI to act in their benefit. RBI being a regulator of the banking sector is the only authority to which complaints may be made by third parties regarding functioning/malpractices of other banks. Hence, there is no element of choice as such. There does not appear to be a creation of any fiduciary relationship between RBI and the third parties, as laid down above. Therefore, the PIO's contention that information in query 1 is exempt under Section 8(1)(e) of the RTI Act is rejected," the Bench said.

As regards the correspondence between RBI and the Bank's officials, the PIO denied the information on the basis of Sections 8(1)(a) and (e) of the RTI Act. The PIO has argued that disclosure of information may harm the interest of the bank and the banking system. Disclosure of such information is also against larger public interest as it may lead to loss of public faith in the Bank followed by sudden withdrawal of deposits which would lead to bank failure, the PIO said.

Section 8(1)(a) of the RTI Act exempts "information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence".

Mr Gandhi noted that it was unlikely that disclosure of information sought in query 2 would prejudicially affect the sovereignty and integrity of India, the security, strategic or scientific interests of the State, or relation with foreign State, or lead to incitement of an offence. "The Bench does not believe there is any merit in the argument that disclosure of the correspondence about illegal acts of Deendayal Nagri Sahakari Bank Ltd, and RBI's correspondence with it can have any impact on the economy of India," he said.

Section 8(2) of the RTI Act states, "Notwithstanding anything in the Official Secrets Act, 1923 nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interests in disclosure outweighs the harm to the protected interests".

The Bench said, "It is only logical that the public has a right to know about the functioning and working of such entities including any lapses in regulatory compliances which may be inferred from the correspondence exchanged between RBI and the banks. In view of the same, this Bench is of the considered opinion that even if the information sought in query 2 was exempt under Section 8(1)(a) of the RTI Act,-as claimed by the PIO,- Section 8(2) of the RTI Act would mandate disclosure of the information sought."

The PIO has argued that the Bank provided information to RBI on the trust that RBI would not disclose the information. The information was held in a fiduciary capacity. The PIO has contended that disclosure of information would harm the competitive position of the Bank and adversely affect its economic interest vis-à-vis other banks. Therefore, the information sought was exempt under Section 8(1)(d) of the RTI Act.

Mr Gandhi said, the Bench found certain merit in this contention of the PIO. "A larger public interest would be served by disclosing this information- under Section 8(2) of the RTI Act. In view of the same, this Bench is of the considered opinion that despite the information sought in query 3 being exempted under Section 8(1)(d) of the RTI Act,-as claimed by the Respondent,- Section 8(2) of the RTI Act would mandate disclosure of the information sought," the Bench said.

While allowing the appeal, the CIC directed the PIO to provide the complete information on queries 1, 2 and 3 to Patil before 25 December 2011. 

CENTRAL INFORMATION COMMISSION

Decision No. CIC/SG/A/2011/002069/16018

http://ciconline.nic.in/cic_decisions/CIC_SG_A_2011_002069_16018_M_71376.pdf

Appeal No. CIC/SG/A/2011/002069

Appellant                                                  : Dr Mohan K Patil,

                                                                      Bandra (East), Mumbai - 400051

Respondent                                               : A Udgata,

                                                                       CPIO & Chief General Manager,

                                                                       Reserve Bank of India,

                                                                       Urban Banks Department,

                                                                      Garment House, 1st Floor, Worli,

                                                                      Mumbai - 400018